FAC Explorer

Audit 324275

FY End
2024-06-30
Total Expended
$2.06M
Findings
6
Programs
1
Organization: Afiya Apartments INC (OR)
Year: 2024 Accepted: 2024-10-09
Auditor: Jones & Roth PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
502086 2024-001 Material Weakness Yes E
502087 2024-002 Significant Deficiency Yes L
502088 2024-003 Material Weakness - N
1078528 2024-001 Material Weakness Yes E
1078529 2024-002 Significant Deficiency Yes L
1078530 2024-003 Material Weakness - N

Programs

ALN Program Spent Major Findings
14.181 Supportive Housing for Persons with Disabilities $2.06M Yes 3

Contacts

Name Title Type
RBFBAA4KLXE3 Kathleen Broadhurst Auditee
5416861262 Kari Young Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Afiya Apartments, Inc. was awarded a capital advance in the amount of $1,977,500 from HUD in 2010 under Section 811 of the National Affordable Housing Act. The capital advance qualifies as a major program due to continuing compliance requirements associated with this unamortizable mortgage. Also included in this major program is the HUD Project Rental Assistance Contract (PRAC) awarded. These programs are both components of HUD Supportive Housing for Persons with Disabilities, which is the major program. Determination of the amount of federal awards expended for the Section 811 Capital Advance Program is based on the June 30, 2023 balance of capital advance granted in current and prior years in accordance with the Uniform Guidance. The balance of the capital advance at June 30, 2023 was $1,977,500. Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. De Minimis Rate Used: Y Rate Explanation: Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. Basis of Presentation The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of Afiya Apartments, Inc. under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of Afiya Apartments, Inc., it is not intended to and does not present the financial position, changes in net assets, functional expenses, or cash flows of Afiya Apartments, Inc.
Title: Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Afiya Apartments, Inc. was awarded a capital advance in the amount of $1,977,500 from HUD in 2010 under Section 811 of the National Affordable Housing Act. The capital advance qualifies as a major program due to continuing compliance requirements associated with this unamortizable mortgage. Also included in this major program is the HUD Project Rental Assistance Contract (PRAC) awarded. These programs are both components of HUD Supportive Housing for Persons with Disabilities, which is the major program. Determination of the amount of federal awards expended for the Section 811 Capital Advance Program is based on the June 30, 2023 balance of capital advance granted in current and prior years in accordance with the Uniform Guidance. The balance of the capital advance at June 30, 2023 was $1,977,500. Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. De Minimis Rate Used: Y Rate Explanation: Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2023. Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Afiya Apartments, Inc. was awarded a capital advance in the amount of $1,977,500 from HUD in 2010 under Section 811 of the National Affordable Housing Act. The capital advance qualifies as a major program due to continuing compliance requirements associated with this unamortizable mortgage. Also included in this major program is the HUD Project Rental Assistance Contract (PRAC) awarded. These programs are both components of HUD Supportive Housing for Persons with Disabilities, which is the major program. Determination of the amount of federal awards expended for the Section 811 Capital Advance Program is based on the June 30, 2024 balance of capital advance granted in current and prior years in accordance with the Uniform Guidance. The balance of the capital advance at June 30, 2024 was $1,977,500. Afiya Apartments, Inc. has elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance; however, the award agreements with HUD do not include an indirect cost reimbursement, so there were no indirect costs charged to the federal award programs for the year ended June 30, 2024.

Finding Details

Finding 2024-001
Finding 2024-001 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.’s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Afiya Apartments, Inc. did not perform recertifications for all tenants within the timeframe specified by HUD. We noted significant delays in tenant recertification procedures. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2023-001. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 16 tenants at June 30, 2024, the annual recertifications for 9 tenants were past due. We selected a sample of 7 tenants from a population of 16 for eligibility testing. The sample was not a statistically valid sample. Our sample of 7 tenants did not reveal any exceptions. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2024-002
Finding 2024-002 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Reporting Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD and the HUD Uniform Financial Reporting Standards (24 CFR §5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90-day due date. Condition: The annual audit for the fiscal year ended June 30, 2023 was not submitted by the due date as required by HUD. Cause: The audit was not completed within the applicable time frame, so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2023-002. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2024-003
Finding 2024-003 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Special Tests and Provisions – Residual Receipts and Replacement Reserve Accounts Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD requires disbursements from residual receipts be made only at the discretion of and with the approval of HUD, and disbursements from replacement reserves are to be made only after consent in writing from HUD. Condition: Withdrawals totaling $45,000 from residual receipts and $135,000 from replacement reserves were made without authorization and/or consent from HUD during the year ending June 30, 2024. The funds were deposited back into the respective reserve accounts prior to year end. Cause: Management was aware of the regulatory agreement that requires prior HUD authorization to make withdrawals; however, due to a cash flow shortage, management made the temporary withdrawals with the intention to replace the funds. Effect: The effect is material non-compliance with the terms of the regulatory agreement as such withdrawals are not allowed to be made without prior HUD approval. Questioned Costs: None. Repeat Finding: No. Context: We noted the deposited were made into the accounts within one month of the withdrawal date to replace the amount of funds withdrawn and the residual receipts and replacement reserve accounts were properly funded as of June 30, 2024. Recommendation: We recommend management ensures the internal controls over compliance in place that do not allow withdrawals from the reserves without prior HUD approval are followed. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2024-001
Finding 2024-001 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Eligibility Criteria: In accordance with Afiya Apartments, Inc.’s regulatory agreement with HUD for its HUD Section 811 Capital Advance and HUD Section 811 Project Rental Assistance Contract (PRAC), Afiya Apartments, Inc. is required to annually recertify its tenants. It is the responsibility of management to design and implement internal controls to ensure the tenants are recertified within the applicable timeframe required by HUD. Condition: Afiya Apartments, Inc. did not perform recertifications for all tenants within the timeframe specified by HUD. We noted significant delays in tenant recertification procedures. Cause: There were not properly designed or implemented internal controls to ensure the tenant recertifications were performed in the timeframe required by HUD. Effect: The effect is material non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2023-001. Context: We noted from review of the Forms HUD-52670 Schedule of Tenant Assistance Payments Due and other client prepared schedules, several tenants had not been recertified during the fiscal year as required. From the total 16 tenants at June 30, 2024, the annual recertifications for 9 tenants were past due. We selected a sample of 7 tenants from a population of 16 for eligibility testing. The sample was not a statistically valid sample. Our sample of 7 tenants did not reveal any exceptions. Recommendation: We recommend management review the current internal control procedures and implement additional procedures to ensure annual recertifications are performed as required by HUD. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2024-002
Finding 2024-002 Type of Finding: Significant deficiency in internal control over compliance and immaterial noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Reporting Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD and the HUD Uniform Financial Reporting Standards (24 CFR §5.801) require audited financial statements to be submitted to HUD within 90 days of the fiscal year end. HUD may authorize an extension to the 90-day due date. Condition: The annual audit for the fiscal year ended June 30, 2023 was not submitted by the due date as required by HUD. Cause: The audit was not completed within the applicable time frame, so it was not available to be submitted to HUD by the due date. Effect: The effect is immaterial non-compliance with the terms of the HUD program listed above. Questioned Costs: None. Repeat Finding: Yes, see Finding 2023-002. Context: Not applicable. Recommendation: We recommend management design and implement internal controls over compliance to ensure the audit is completed timely and submitted to HUD as required. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
Finding 2024-003
Finding 2024-003 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Federal program: HUD Supportive Housing for Persons with Disabilities (Assistance Listing #14.181) Compliance Requirement: Special Tests and Provisions – Residual Receipts and Replacement Reserve Accounts Criteria: Afiya Apartments, Inc.’s regulatory agreement with HUD requires disbursements from residual receipts be made only at the discretion of and with the approval of HUD, and disbursements from replacement reserves are to be made only after consent in writing from HUD. Condition: Withdrawals totaling $45,000 from residual receipts and $135,000 from replacement reserves were made without authorization and/or consent from HUD during the year ending June 30, 2024. The funds were deposited back into the respective reserve accounts prior to year end. Cause: Management was aware of the regulatory agreement that requires prior HUD authorization to make withdrawals; however, due to a cash flow shortage, management made the temporary withdrawals with the intention to replace the funds. Effect: The effect is material non-compliance with the terms of the regulatory agreement as such withdrawals are not allowed to be made without prior HUD approval. Questioned Costs: None. Repeat Finding: No. Context: We noted the deposited were made into the accounts within one month of the withdrawal date to replace the amount of funds withdrawn and the residual receipts and replacement reserve accounts were properly funded as of June 30, 2024. Recommendation: We recommend management ensures the internal controls over compliance in place that do not allow withdrawals from the reserves without prior HUD approval are followed. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.